volume global interconnection index · 1. idc futurescape: worldwide it industry 2018 predictions,...

GLOBAL INTERCONNECTION INDEXMEASURING THE GROWTH OF THE GLOBAL DIGITAL ECONOMY2VOLUME

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GLOBAL INTERCONNECTION INDEX 2. Foreword

4. Evolution

5. Relevance

6. Bandwidth forecast

7. Regional view

8. Industry view

9. Ecosystem view

10. Firmographics view

11. Interconnection indicators

12. Interconnection use cases

13. Interconnection target state

14. Methodology

15. Global Interconnection Index 2021 forecast

16. United States bandwidth forecast

17. Europe bandwidth forecast

18. Asia-Pacific bandwidth forecast

19. Latin America bandwidth forecast

20. Learn more

1

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2 #InterconnectionIndex | Equinix.com | © 2018 Equinix, Inc.EQIX-GXI-Vol2-USEN-Web | 1404-129472 | vSeptember 13, 2018 3:02 PM | 081418 | Q217

FOREWORD

1. Counterparties is defined as Networks, Clouds and Partners2. Cisco – “Visual Networking Index”, 2017, 3. IDC FutureScape: Worldwide IT Industry 2018

Just as Interconnection was critical to enable the internet, scale the web and power the global digital economy, it is the key to a strong digital business. Without it, companies grow weaker. Why? Because competitive strength is measured by how well an organization can perform, scale and speed its products and services to market. But unlike pre-digital days, these core business drivers now rely on a company’s ability to reach everywhere, interconnect everyone and integrate everything essential for success.

People, software and machines are consuming data faster, and in more locations than ever before. This data explosion is creating new pressures and opportunities for business and technology leaders who need to aggregate data in new, scalable ways that allow for real-time analysis. As digital transformation accelerates for every company in every industry, around the world, Enterprises are turning to private and direct Interconnection to solve this complex integration challenge.

With Interconnection, businesses can directly and securely connect an increasingly distributed global mix of employees, partners and customers, as well as their most valuable asset: their data. By bringing all their data sources and constituents together digitally, businesses can simultaneously capture, correlate and transform all that data into new customer value.

The Global Interconnection Index (the Index), published annually by Equinix, delivers insights that drive digital business advantage by tracking, measuring and forecasting growth in Interconnection Bandwidth—the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties1 and providers at distributed IT exchange points inside carrier-neutral colocation data centers. Volume 2 of the Index sheds new light on the massive growth of Interconnection Bandwidth that is supporting digital business interaction between companies or organizations.

The Index predicts Interconnection Bandwidth to grow to 8,200+ Terabits (Tbps) by 2021, a dramatic increase over the previous year’s projection. This represents a significant five-year compound annual growth rate (CAGR) of 48%, almost double the expected 26% CAGR of global IP Traffic2.

Fueling this rapid rise are major macro, technology and regulatory forces that are changing how businesses, consumers and technologies interact. IDC predicts that by 2021, at least 50% of global GDP will be digitized, with growth in every industry driven by digitally enhanced offerings, operations, and relationships3. To capture digital value, companies will need to support real-time interactions by more strategically interconnecting the workflows across people, things, locations, clouds and data.

Volume 2 of the Global Interconnection Index offers compelling new insights into how Interconnection Bandwidth is powering the success of digital business.

Continued on next page

THE INTERCONNECTION IMPERATIVE: INTEGRATE TO ACCELERATE DIGITAL BUSINESS

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1. Cybersecurity Regained: Preparing to Face Cyber Attacks, EY, 2017

Simultaneously, large-scale cybersecurity breaches are one of the most serious risks facing the world today. By 2021, the global cost of cybersecurity breaches will reach US$6 trillion1. This escalating security risk is challenging the internet as the preferred mode of data traffic exchange as businesses increasingly bypass it in favor of private, direct connections.

As our digital world becomes more complex and decentralized, businesses need to simplify how they distribute and integrate their IT infrastructures while maintaining a high caliber of service. The 2018 Global Interconnection Index includes new insights into the common Interconnection use cases that identify how strategic services placement, across metro Interconnection hubs, allows companies to master the digital business changes that today’s trends demand:

• Network Optimization: Digital business requires real-time interactions between people, things, locations, clouds and data. Businesses can solve latency issues by shortening the distance between users and services, localizing traffic in the hubs.

• Hybrid Multicloud: Leveraging hybrid, multicloud architectures and accessing vital business ecosystems with agility requires Interconnection between distributed IT infrastructures and the clouds and partners that drive global digital business. Businesses can solve complexity by directly connecting multiple public and private clouds and segmenting traffic in the hubs.

• Distributed Security: Digital business increases vulnerability points, especially when data is distributed across many different counterparties. Reduce risk, and solve compliance challenges by deploying and connecting security services, and expanding security ecosystem connectivity, in the hubs.

• Distributed Data: Digital trade flows are creating global business and data processes involving an increasing mix of customers, partners and employees. To scale this exchange of data requires integrating analytics, data lakes and data controls in the hubs.

These four classes of Interconnection use cases solve for the impact of major macro, technology and regulatory trends and combine to form an Interconnection maturity model that drives accelerated digital business transformation.

It’s make-or-break time for digital transformation and the stakes are getting higher every day. The need for Interconnection has never been greater, and the growth of Interconnection Bandwidth has never been so important to the future of digital business. The Enterprises and Service Providers that know how to harness the power of Interconnection to strengthen and accelerate their digital strategies will position themselves to lead the next era of global business.

CONTINUED

GET DIGITAL READY: MASTER THE INTERCONNECTION USE CASES THAT MATTERFOREWORD

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This required the industry to solve how to exchange and transfer traffic among different provider networks across different regions and countries.

Physical infrastructure meeting places, called internet exchanges, were created and hosted inside carrier-neutral colocation data center campuses. The voluntary exchange of traffic among providers became known as peering.

Over time, peering in carrier-neutral data center campuses evolved to become IT traffic exchange points for all types of business-to-business and machine-to-machine traffic by integrating direct private connections of counterparties with distributed IT components colocated. This is known as Interconnection.

This process was manual. Now, with the emergence of SDN (Software-Defined Networking) and NFV (Network Function Virtualization), businesses can create and connect new global business workflows dynamically, proliferating the number of interactions and volume of data exchanged between users, applications and devices. This results in an accelerated need for Interconnection Bandwidth within and across more exchange points worldwide.

OVERVIEW OF INTERCONNECTION

EVOLUTION

People & Locations

BEFORE INTERCONNECTION WITH INTERCONNECTION

Enterprise HeadquartersPhysical IT Traffic Exchange Point

Network Carrier

Clouds Data

Carrier-Neutral Data CentersNetwork Carriers

Constrained point-to-point connectivity, backhauling user traffic to central data center

Optimized, multipoint connectivity via direct private traffic exchange points between users and local services

Network EndpointSDN Programmable NFV Components

INTERCONNECTION EMERGED FROM THE CHALLENGE TO GLOBALLY SCALE THE INTERNET

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1. IDC FutureScape: Worldwide IT Industry 2018 Predictions, 2017 2. Global Trends 2030: Alternative Worlds, U.S. National Intelligence Council, 20123. Ten Questions with Global Strategist Parag Khanna, Georgetown Magazine, 20184. Cybersecurity Regained: Preparing to Face Cyber Attacks, EY, 2017

5. Cross Border Data Flows, ITIF, 20186. Capitalizing on Your Business Ecosystems Economy: Gartner, 2017

Major macro, technology and regulatory trends are converging to form an unprecedented era of complexity and risk, and are forcing the integration of physical and digital worlds.

This drives the acceleration necessary for digital business transformation to create a secure, compliant and responsive global business platform. Interconnection is a key building block to solve for this transformation.

INDUSTRY TRENDS PRIORITIZING THE NEED FOR INTERCONNECTION

RELEVANCE

TREND INSIGHT IMPLICATION NEED

Digital Business

By 2021, at least 50% of global GDP will be digitized, with growth in every industry driven by digitally enhanced offerings, operations and relationships1

Digital business forces the need to support real-time interactions to capture value

Real-time interactions require the Interconnection of people, things, locations, clouds and data

Urbanization Every year, 65 million people are added to the world’s urban population, the equivalent of adding seven cities the size of Chicago2, creating as many as 50 urban metro hubs by 20303

Urbanization is transforming global demographics and demand origins, creating a proximity need for digital services

Supporting urban density requires the Interconnection of applications, data, content and networking in locations where there is a concentration of users

Cybersecurity A large-scale breach of cybersecurity is one of the most serious risks facing the world today. The scale of the threat is expanding drastically: by 2021, the global cost of cybersecurity breaches will reach US$6 trillion4

Digital business increases vulnerability points, especially when data is distributed across many different sources and consumers

Managing cybersecurity risk requires distributing and interconnecting security controls at points of business presence to improve security posture locally and globally

Data Compliance

More than 18 major countries globally block the transfer of data related to accounting, tax and financial information5

Compliance with data regulations requires the need to maintain data locally while being used globally

Addressing compliance requires the Interconnection of data storage, analytics and networking placed directly in business regions that require compliance

Business Ecosystems

By 2021, organizations using a mix of intermediaries will more than double, and active engagement with industries outside their native industry will nearly triple6

Digital trade flows are creating global business and data processes involving an increasing mix of customers, partners and employees

To scale, business ecosystems require digital ecosystems supported by technology infrastructure interconnecting the participants and supporting digital flows

INDUSTRY TRENDS

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Accelerating global growth of Interconnection Bandwidth2 as Enterprises and Service Providers interconnect together for digital business.

By 2021, installed Interconnection Bandwidth capacity is expected to reach 8,200+ Tbps, a five-fold increase, with double-digit growth across all industries.

Enterprises are companies in traditional business sectors like Banking and Insurance, Manufacturing, Energy and Utility, Retail, Healthcare and Government. These firms are expected to experience 7x growth3, surpassing Service Providers as the largest consumers of Interconnection Bandwidth, driven by the transformation of their IT platforms for digital business.

As digital natives, Service Providers are companies that have digital traffic flows as a primary element of their business model, covering sectors like Telecommunications, Cloud and IT Services, and Content and Digital Media industries. These businesses as a group are predicted to experience robust 3x growth3, as they continue to use IT traffic exchanges as core to their business models.

2021 FORECAST1

BANDWIDTH FORECAST

1,000 3,000 5,000 7,000 9,000 Tbps2017

2021

Region

U.S.EUAPLATAM

Digital Ecosystem Counterparties 1,000 3,000 5,000 7,000 9,000 Tbps2017

2021Financial Services ProvidersSupply Chain PartnersContent Providers

Cloud & IT ProvidersNetwork Providers

Interconnecting to:

1,000 3,000 5,000 7,000 9,000 Tbps2017

2021

Industry Segment

Enterprise Service Providers

BANDWIDTH FORECAST

1. This report contains forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that may cause actual events or results to differ materially from the estimates or the results implied or expressed in such forward-looking statements.

2. Interconnection Bandwidth is defined as the total capacity provisioned to privately and directly exchange traffic, with a diverse set of counterparties and providers, at distributed IT exchange points inside carrier-neutral colocation data centers.

3. Predicted growth between 2017–2021

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The impact of macro trends driving Interconnection Bandwidth growth varies by region.

As early adopters of digital business and the headquarters for the largest number of multi-national enterprises, the United States is expected to grow at a 45% CAGR, contributing more than 40% of Interconnection Bandwidth globally.

A growing number of regulations requiring data compliance is serving as a catalyst for growth in Europe, which is predicted to grow at a 48% CAGR, contributing about 23% of Interconnection Bandwidth globally.

Benefiting from rapid urbanization and home to many of the largest digital content providers, Asia-Pacific is anticipated to grow at a 51% CAGR, contributing more than 27% of Interconnection Bandwidth globally.

Emerging market dynamics and growing digital business adoption positions Latin America for an expected 59% CAGR to reach 755 Tbps of installed capacity, contributing more than 9% of Interconnection Bandwidth globally.


REGIONAL VIEW

23%

7%

25%

44%

9%

27%

23%

40%

2017 2021

2017

2021

1,000 2,000 3,000 4,000

118755

3961,921

7543,318

(Tbps)

4302,220

2017

2021

2017

2021

2017

2021

10,000

8,000

6,000

4,000

2,000

2018 2021202020192017

CAGR: +48%(Tbps)

+45% CAGR

+48% CAGR

+51% CAGR

+59% CAGR

WORLDWIDE GROWTH REGIONAL GROWTH REGIONAL MIX

EU AP LATAMU.S.

INTERCONNECTION BANDWIDTH1 GROWTH BY 2021

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INTERCONNECTION BANDWIDTH BY INDUSTRY TYPE

Interconnection is emerging pervasively across all industries to help speed and scale digital business transformation.

INDUSTRY VIEW


400 800 1,200 1,600 2,000

Telecommunications 36% 21%

Cloud & IT Services 37% 17%

Banking & Insurance 65% 13%

Manufacturing 56% 12%

Securities & Trading 61% 10%

Content & Digital Media 41% 9%

Business & Prof. Services 65% 5%

Energy & Utility 73% 4%

Wholesale & Retail 67% 3%

Installed Capacity (Tbps)2021 MIX

CAGR17-21

1,382

1,046

975

844

761

1,756

410

328

268

Other 71% 3%213

Healthcare & Life Sciences 70% 2%169

Government & Education 66% 1%61

EU AP LATAMU.S.

As the early adopters of Interconnection, the Telecommunications industry is expected to grow at a 36% CAGR as it evolves its platforms to enable digital business, address cybersecurity and provide new interconnected services while implementing 100G capabilities into its platform.

As a purveyor of digital capabilities, the Cloud and IT Services industry is expected to remain a leading consumer of Interconnection Bandwidth, predicted to grow at a 37% CAGR, as these businesses continue to extend the global reach of their platforms, while enabling secure data exchange in a compliant manner with their customers.

A perfect digital storm is brewing for the Banking and Insurance industry with the convergence of fintech, cybersecurity, data compliance and new competitive ecosystems. This is creating a force multiplier effect with a predicted 65% CAGR, as digital transformation of the industry unfolds.

As one of the most physically distributed industries, Manufacturing is experiencing a renaissance period as digital business unlocks new revenue streams while creating new efficiencies. This is expected to drive Interconnection Bandwidth usage to grow at a 56% CAGR, as the industry shifts to movement of information and local production of goods.

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200 400 600 800 1,000 5,000 CAGR

Network Providers 42% 66%

Cloud & IT Providers 98% 18%

Financial Services Providers 47% 9%

Content Providers 52% 5%

Supply Chain Partners 41 % 2%

168

780

70

373

40

158

5,463

1,327

931,439

Installed Capacity (Tbps)2021 MIX

2017 2021

Interconnection is enabling Enterprises to build their digital ecosystem by seamlessly integrating a myriad of Service Providers and business partners.

ECOSYSTEM VIEW


INTERCONNECTION BANDWIDTH BY COUNTERPARTY

Enterprises continue to increase and diversify their Interconnection to Network Providers as they optimize network topology for digital business. The Interconnection Bandwidth to support this is expected to grow at a 42% CAGR as Enterprises look to effectively integrate an increasing mix of connected services across different access points globally.

The direct Interconnection of Enterprises with Cloud and IT Providers continues to proliferate as businesses leverage hybrid multicloud architectures for digital business scale and agility. Interconnection Bandwidth growth here, at a 98% CAGR, is expected to surpass all other categories, supporting businesses building out new digital services and migrating existing workloads to third-party cloud platforms.

Securely transacting and exchanging payments digitally requires Enterprises to directly Interconnect to Financial Services Providers to support the flow of business transactions across digital ecosystems. The Index forecasts a 47% CAGR in Interconnection Bandwidth required to enable this.

Businesses prioritizing rich, customer-first digital experiences will directly Interconnect to Content Providers to solve the integration of video interactive multimedia across varying devices and geographies. This is expected to drive the need for Interconnection Bandwidth by a 52% CAGR.

Transforming a business supply chain to digital requires Enterprises to directly Interconnect to Supply Chain Partners, which creates secure and compliant data exchange for business workflows. To support this emerging B2B digital paradigm, Interconnection Bandwidth is predicted to grow at a 41% CAGR.

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Firmographic profiling shows a direct correlation of Interconnection Bandwidth adoption by businesses based on three categories—Users, Geographical Presence and Use of Distributed IT Services—as businesses of all sizes interconnect their digital business platforms globally.

• Users: Using employee count as a proxy for number of users, the Index predicts for every 500 employees, businesses will need to increase Interconnection Bandwidth 4x to support the Interconnection of users across their digital business workflows.

• Geographical Presence: For businesses operating in more than five countries, the Index forecasts an 8x increase in Interconnection Bandwidth required to locally interconnect data sources with security controls to address both data compliance and reduce cybersecurity vulnerability points.

• Use of Distributed IT Services: The Index identified when businesses spend greater than US$50K per month on distributed IT services, the need for Interconnection Bandwidth capacity is expected to increase 9x to support real-time interactions enabled by the Interconnection of people, things, clouds and data.

FIRMOGRAPHICS VIEW


350

150

50

Interconnection Bandwidth (Gbps)

Number of Countries

1-2 3-4 5-10 11+

5375

172341

1-2 3-5 6-10 11-20 21+

300

200

50

Number of Sites

47

7396

129260Interconnection Bandwidth (Gbps)

<$50M $50M-$1B >$1B-$10B >$10B

500

300

200

100


Revenue

42106

182

481

1-50 51-100 101-500 501-1,000 1,000+

300

200

100

50

Number of Employees

19 26 43

169

272

1-2 3-5 6-10 11-14 15+Number of SaaS Providers

74

250

150

100

50


125

234

93

43

<1K 1K 5K 20K 50K 100K 500K

Technology Spend

Interconnection Bandwidth (Gbps)1,4001,2001,000

800600400200

Hosting DDoS/WAF CDN DNSGTM


1472

1 USERS Average Interconnection Bandwidth by Revenue and Number of Employees 2 LOCATIONS

Average Interconnection Bandwidth by Geographical Presence 3 USE OF DISTRIBUTED IT SERVICES

Average Interconnection Bandwidth by Number of Distributed IT Services

FIRMOGRAPHIC PROFILE PRIORITIZES NEED FOR INTERCONNECTION BANDWIDTH

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The Index has identified a consistent set of distributed IT services that indicates the implementation of digital business platforms. These distributed IT services can be directly correlated to an increased need for Interconnection Bandwidth. When combined with Interconnection, these distributed IT services solve critical use cases that must be addressed by all businesses.

INTERCONNECTION BANDWIDTH1 DRIVERS

INTERCONNECTION INDICATORS

Web AnalyticsCDN

DistributedCompute

DistributedApps

DistributedData

DistributedUsers

DistributedSecurity

DistributedInsights

DistributedWorkflow

Distributed Content

N

ETW

OR

K

HYBRID DISTRIBUTED D

ISTRIB

UTED

OP

TIM

IZA

TIO

N

MULTICLOUD SECURITY D

ATA

DIGITALBUSINESS

Indicators Use CasesNeedsIaaS

The Index research shows that these common indicators of IT distribution needs align to Interconnection use cases.

DISTRIBUTED IT SERVICES DRIVING INTERCONNECTION BANDWIDTH GROWTH

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OBJECTIVEOptimize network segment(s)

Directly connect public and private clouds

Adjacently deploy security services

Manage data exchange globally

NEED Solve latency Solve complexity Solve risk Solve integration

STRATEGY

Shorten the distance between users and services, localize traffic in the hubs

Connect multiple clouds and segment traffic in the hubs

Deploy and connect security controls in the hubs

Integrate analytics, data lakes and data controls in the hubs

DISTRIBUTED IT SERVICES

DEPLOYED

CDN, DNS/GTM, DDoS/WAF

IaaS, SaaS, Mobile Web

DDoS/WAF, SaaS, Web Analytics

NoSQL/Hadoop, IaaS, SaaS

INTERCONNECTIONS

COUNTERPARTIES

METRO HUBS

The four classes of Interconnection use cases2, identified on the prior page, combine to form an Interconnection maturity model that results in a digital-ready infrastructure.

The model evolves in a journey of incremental steps resulting in an accretive set of capabilities. Businesses build hubs, connect multiple clouds, deploy security components and enable data exchange in points of business presence.

The data shows a common journey starts with 2 hubs, 6 Interconnections and 2 third-party counterparties. This grows to 9+ hubs globally with 30+ Interconnections across 13+ counterparties for a company that has fully implemented a global digital-ready infrastructure.

INTERCONNECTION MATURITY MODEL

INTERCONNECTION USE CASES USE CASES REQUIRING INTERCONNECTION BANDWIDTH1

15+ 30+

8+ 13+

6+

2+

2

8+

5+

2+ 3+ 9+

Distributed Data

Network Hub

Network &

Cloud Hub

Network, Cloud &

Security Hub

Network, Cloud, Security

& Data Hub

Hybrid Multicloud

Distributed Security

Network Optimization


2. These four classes of Interconnection use cases were developed from analyzing more than 1800 industry implementations worldwide, are documented in the IOA® Knowledge Base, and have been validated by IT practitioners and industry experts.

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A GLOBAL MESH OF TAILORED INTERCONNECTION HUBS

INTERCONNECTION DEPLOYMENT MODEL

INTERCONNECTION TARGET STATE

AMERICAS EMEA ASIA-PACIFIC

INTER-REGIONIN-REGION

HUBS

9+ HUBS 13+ COUNTERPARTIESNetworks, Clouds and Partners

30+ INTERCONNECTIONS

+ + +

SEATTLE

DENVER

ATLANTA

BOSTON

PHILADELPHIA

MIAMI

TORONTO

DUSSELDORF

MUNICH

HELSINKISTOCKHOLM

WARSAW

ISTANBULSOFIAZURICH MILAN

SEVILLE

GENEVA

MADRID

BARCELONA

DUBAI

PARIS

LONDONDUBLIN

RIO DE JANEIRO

SÃO PAULO

AMSTERDAM

MANCHESTER

FRANKFURT

SILICONVALLEY

LOS ANGELES

CHICAGO

NEW YORK

DALLASWASHINGTON, D.C.

SINGAPORE

HONG KONG

TOKYOOSAKA

JAKARTA

MELBOURNE

ABU DHABI

SHANGHAI

BOGOTÁ

HOUSTON

CULPEPER, VA

LISBON

SYDNEY

BRISBANE

PERTHADELAIDE

CANBERRA

USE CASES

Hybrid Multicloud


Distributed Data


AMERICAS EMEA ASIA-PACIFIC

INTER-REGIONIN-REGION

HUBS

9+ HUBS 13+ COUNTERPARTIESNetworks, Clouds and Partners

30+ INTERCONNECTIONS

+ + +

SEATTLE

DENVER

ATLANTA

BOSTON

PHILADELPHIA

MIAMI

TORONTO

DUSSELDORF

MUNICH

HELSINKISTOCKHOLM

WARSAW

ISTANBULSOFIAZURICH MILAN

SEVILLE

GENEVA

MADRID

BARCELONA

DUBAI

PARIS

LONDONDUBLIN

RIO DE JANEIRO

SÃO PAULO

AMSTERDAM

MANCHESTER

FRANKFURT

SILICONVALLEY

LOS ANGELES

CHICAGO

NEW YORK

DALLASWASHINGTON, D.C.

SINGAPORE

HONG KONG

TOKYOOSAKA

JAKARTA

MELBOURNE

ABU DHABI

SHANGHAI

BOGOTÁ

HOUSTON

CULPEPER, VA

LISBON

SYDNEY

BRISBANE

PERTHADELAIDE

CANBERRA

USE CASES

Hybrid Multicloud


Distributed Data


The Index has identified the deployment profile of a digital-ready state that unlocks the power of Interconnection to address major macro industry trends facing all businesses. This target state incorporates more than 9 hubs across 3 regions, interconnecting 13+ unique counterparties, using over 30 direct Interconnections to implement a combination of the critical use cases necessary to solve for digital business.

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1. This report contains forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that may cause actual events or results to differ materially from the estimates or the results implied or expressed in such forward-looking statements.

2. Used technology market intelligence from data sources including Forrester, IDC, 451 Research and Synergy Research Group

The Index1 tracks, measures and forecasts the growth of bandwidth required for private Interconnections among companies supporting digital business.

The methodology for sizing the global Interconnection market commenced with an analysis of colocation ecosystem participants in carrier-neutral facilities across every region and major metropolitan area. The research sample was stratified across industries and company size segments, providing a comprehensive breakdown of colocation subscribers and their Interconnections.

Average Interconnections per company were applied to global counts of colocation participants to identify the current volume of Interconnections worldwide. Our methodology accounts for both physical and virtual Interconnections, including those counterparties whose infrastructure may sit outside of a carrier-neutral facility but still access the fabric of a carrier-neutral facility via SDN.

The estimated provisioned bandwidth, as measured in gigabits per second, was identified for each Interconnection used by the companies in this study’s research sample.

METHODOLOGY

1 2 3 4CREATED MARKET BASELINE

ASSESSED MARKET CONDITIONS

CORRELATED DEMAND DRIVERS

BUILT PREDICTIVE MODEL

Analyzed the adoption profile of thousands of carrier-neutral colocation data center providers and participants globally across every region and major metro2

Assessed local and regional market conditions, including macro economic trends, market demographics and industry concentrations

Identified key demand drivers of digital business that force the distribution and Interconnection of IT components within proximity of users

Built a predictive model to forecast Interconnection Bandwidth growth by region, use case and market segment

Created a stratified market baseline across industries, regions and company size segments

Developed a set of indicators and local market condition filters to assist in producing tailored predictions

Produced a weighted demand multiplier to assist in predicting growth to factor the impact of digital business transformation

Used market baseline, applied local market condition filters and factored demand drivers to derive forecast

OUR PROCESS

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INTERCONNECTION INSTALLED BANDWIDTH CAPACITY (Tbps)


2. Rounding may affect totals.

Total Interconnection Bandwidth is expected to grow at a 48% CAGR by 2021, reaching 8,200+ Tbps.

The impact of macro trends driving Interconnection Bandwidth growth varies by region, though one clear theme emerges, the expected outsized growth of Enterprise. By 2021, Enterprise Interconnection Bandwidth is expected to increase by nearly 7x, overtaking Service Providers.

Given the rapid rise in digital traffic, Service Providers—the digital natives—are expected to maintain healthy growth (expanding 3x) by 2021, as they scale their operations via IT exchange points.

GLOBAL INTERCONNECTION BANDWIDTH1 GROWTH BY 2021

2021 FORECAST

By Industry 2017 2018 2019 2020 2021 CAGR

Telecommunications 507 692 970 1,335 1,756 36%

Cloud & IT Services 389 537 746 1,031 1,382 37%

Banking & Insurance 143 243 394 640 1,046 65%

Manufacturing 165 243 385 611 975 56%

Securities & Trading 125 207 329 529 844 61%

Content & Digital Media 191 270 384 546 761 41%

Business & Professional Services 55 86 146 245 410 65%

Energy & Utility 36 61 108 189 328 73%

Wholesale & Retail Trade 34 55 94 159 268 67%

Healthcare & Life Sciences 20 33 57 99 169 70%

Government & Education 8 13 22 37 61 66%

Other 26 41 71 124 214 71%

Total Industry2 1,699 2,481 3,706 5,545 8,214 48%

By Digital Ecosystem Counterparties 2017 2018 2019 2020 2021 CAGR

Interconnecting to Network Providers 1,327 1,876 2,712 3,835 5,463 42%

Interconnecting to Cloud & IT Providers 93 184 394 852 1,439 98%

Interconnecting to Financial Services Providers 168 241 344 488 780 47%

Interconnecting to Content Providers 70 109 170 253 373 52%

Interconnecting to Supply Chain Partners 39 71 88 117 159 41%

Total Ecosystem Counterparties 1,699 2,481 3,706 5,545 8,214 48%

By Region 2017 2018 2019 2020 2021 CAGR

U.S. 754 1,091 1,585 2,301 3,318 45%

AP 430 628 962 1,470 2,220 51%

EU 396 579 864 1,299 1,921 48%

LATAM 118 187 295 475 755 59%

Total Region2 1,698 2,481 3,706 5,545 8,214 48%

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2. Rounding may affect totals.3. These are the top metros and not inclusive of all metros.

INTERCONNECTION INSTALLED BANDWIDTH CAPACITY (Tbps)NEW YORK | WASHINGTON, D.C. | CHICAGO | SILICON VALLEYUNITED STATES (U.S.)

By Industry 2017 2018 2019 2020 2021 CAGR

Telecommunications 227 313 439 605 801 37%

Banking & Insurance 80 133 207 324 509 59%

Manufacturing 84 124 196 310 490 55%

Cloud & IT Services 140 188 250 329 426 32%






Energy & Utility 4 7 12 20 33 63%


Other 10 15 24 38 62 63%

Total Industry2 754 1,090 1,585 2,301 3,318 45%


Interconnecting to Network Providers 593 827 1,157 1,573 2,153 38%

Interconnecting to Cloud & IT Providers 43 84 176 376 626 96%




Total Ecosystem Counterparties 754 1,090 1,585 2,301 3,318 45%

By Metro 2017 2018 2019 2020 2021 CAGR

New York 178 271 387 587 878 49%

Chicago 116 175 270 408 617 52%

Washington, D.C. 136 190 265 370 525 40%

Silicon Valley 108 155 226 323 464 44%

Total Metro3 538 792 1,148 1,688 2,484 47%

The United States is expected to grow at a 45% CAGR, contributing more than 40% of Interconnection Bandwidth globally.

As early adopters of digital business, the United States has led Interconnection adoption. Looking forward, the U.S. is expected to have relatively consistent mid-40% growth each year through 2021 in spite of its maturity.

• U.S. Interconnection Bandwidth is expected to reach 3,300+ Tbps by 2021 due to a 45% CAGR, driven by strong anticipated growth in Chicago (52% CAGR) and New York (49% CAGR).

• Telecommunications is expected to remain the largest industry, driving the largest increase of traffic through 2021, representing 24% of the market; Healthcare & Life Sciences is expected to be the fastest-growing Interconnection industry through 2021 (65% CAGR), although from a more modest base.

• Enterprises are expected to account for 54% of Interconnections in 2021, up from 38% last year.

• Over 63% of Enterprises’ Interconnection Bandwidth is expected to be used to reach Network Providers, while another 18% will be to connect to Cloud & IT Providers.

• The top four metros are expected to represent >75% of Interconnections in 2021 and, with a 47% CAGR, outgrow the rest of the market (40% CAGR).

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LONDON | FRANKFURT | AMSTERDAM | PARIS

INTERCONNECTION INSTALLED BANDWIDTH CAPACITY (Tbps)EUROPE (EU)

By Industry 2017 2018 2019 2020 2021 CAGR






Energy & Utility 16 26 43 71 117 64%


Manufacturing 15 23 38 63 103 61%




Other 7 11 21 36 65 81%

Total Industry2 396 579 864 1,299 1,921 48%


Interconnecting to Network Providers 310 438 637 917 1,311 43%





Total Ecosystem Counterparties 396 579 864 1,299 1,921 48%

By Metro 2017 2018 2019 2020 2021 CAGR

London 127 195 293 443 681 52%

Frankfurt 60 94 150 236 373 58%

Amsterdam 52 78 126 199 319 57%

Paris 41 60 90 137 210 51%

Total Metro3 280 427 659 1,015 1,583 54%

Europe is predicted to grow at a 48% CAGR, contributing about 23% of Interconnection Bandwidth globally.

A growing number of regulations requiring data compliance are serving as a catalyst of Interconnection growth throughout Europe. Combined with economic growth and cross-border trade, this is projected to reach 1,900+ Tbps by 2021.

• The top four metros will reach nearly 85% of European traffic by 2021, with London alone being more than 35% of Europe; each of these four key metros is expected to outgrow the rest of Europe by at least a 10% CAGR.

• Similar to the U.S., Telecommunications is expected to remain the largest industry segment growing at a 32% CAGR, followed by Cloud & IT Services, with these two industries composing 38%+ of total bandwidth.

• Banking & Insurance is expected to add 210+ Tbps through 2021, while Securities & Trading could add almost 200 Tbps.

• The Enterprise vertical is expected to account for 55%+ of total Interconnections in 2021, up from 34% last year, growing at a 67% CAGR.

• Two-thirds of Enterprise bandwidth is expected to be used to Interconnect to Network Providers.

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INTERCONNECTION INSTALLED BANDWIDTH CAPACITY (Tbps)TOKYO | SINGAPORE | HONG KONG | SYDNEY | ASIA-PACIFIC (AP)

By Industry 2017 2018 2019 2020 2021 CAGR



Manufacturing 57 82 128 202 321 54%



Energy & Utility 14 24 46 84 154 83%






Other 8 13 22 42 68 67%

Total Industry2 430 628 962 1,470 2,220 51%


Interconnecting to Network Providers 334 471 697 1,001 1,462 45%





Total Ecosystem Counterparties 430 628 962 1,470 2,220 51%

By Metro 2017 2018 2019 2020 2021 CAGR

Tokyo 82 124 192 293 445 53%

Singapore 85 124 182 266 394 47%

Sydney 58 84 125 184 274 48%

Hong Kong 43 66 103 160 248 55%

Total Metro3 268 397 603 902 1,362 50%

Asia-Pacific is anticipated to grow at a 51% CAGR, contributing 27%+ of Interconnection Bandwidth globally.

Benefiting from rapid urbanization, AP’s Interconnection traffic growth rate is expected to be faster than more developed regions, with expectations that total traffic will reach 2,200+ Tbps by 2021, or 15%+ larger than Europe.

• The top metros are expected to equate to 61% of overall AP Interconnection traffic, growing at a 50% CAGR through 2021.

• Cloud & IT Services is the largest industry segment, and is expected to remain so through 2021, growing at a 40% CAGR and representing 22%+ of total AP Interconnection Bandwidth.

• Energy & Utility is expected to be the fastest-growing segment with Interconnection Bandwidth increasing nearly 11x over a four-year period.

• The Enterprise vertical is expected to account for 52% of total Interconnection Bandwidth in 2021, and grow at a robust 66% CAGR vs. 40% for Service Providers.

• Two-thirds of Enterprise bandwidth is expected to be used to Interconnect to Network Providers.

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INTERCONNECTION INSTALLED BANDWIDTH CAPACITY (Tbps)SÃO PAULO | RIO DE JANEIRO | BUENOS AIRES | MEXICO CITY LATIN AMERICA (LATAM)

By Industry 2017 2018 2019 2020 2021 CAGR




Manufacturing 9 14 22 37 61 62%




Energy & Utility 2 3 7 13 24 93%




Other 1 2 4 9 17 83%

Total Industry2 118 185 295 475 755 59%


Interconnecting to Network Providers 90 140 221 345 537 56%





Total Ecosystem Counterparties 118 185 295 475 755 59%

By Metro 2017 2018 2019 2020 2021 CAGR

São Paulo 45 74 121 200 331 64%

Rio de Janeiro 23 37 59 95 154 60%

Buenos Aires 15 24 38 61 98 60%

Mexico City 18 27 42 66 97 51%

Total Metro3 102 162 261 422 680 61%

Latin America is expected to grow at a 59% CAGR to reach 750+ Tbps of installed capacity by 2021, contributing more than 9% of Interconnection Bandwidth globally.

Though Latin America is the smallest region, it is also expected to have the strongest regional Interconnection Bandwidth growth rate, thanks to emerging markets and growing digital business adoption.

• The top four metros are expected to equate to 90% of overall Latin American Interconnection traffic, the highest concentration of any region, growing at a 61% CAGR through 2021.

• Brazil’s two major cities are expected to increase seven-fold over the next four years.

• Content & Digital Media is the largest industry segment, and is expected to remain so through 2021, growing at a 63% CAGR and representing 35% of total LATAM Interconnection Bandwidth.

• Nine of 11 industry segments (excluding Other) are growing at a CAGR greater than 60%.

• The Enterprise vertical is expected to grow at a strong 71% CAGR through 2021, though Enterprise remains relatively low in proportion to total Interconnection traffic at 39%.

• 71% of Enterprise bandwidth is expected to be used to Interconnect to Network Providers.

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